Wednesday, May 8, 2013

THE US ECONOMY SAILS TOWARD AN ICEBERG. WHY A MARKET CRASH IS MORE LIKELY THAN EVER.

For all the crowing by the government and media sources over how well the country is doing, the facts remain that it is all a dangerous illusion and one that seems to be coming to an end. The Dow is soaring to ever higher heights (a dangerous sign in and of itself), housing prices are rising and unemployment is down to 7.something. All of this is being faked to make things look better. This is a real conspiracy that is proven by the facts themselves. The Dow is artificially inflated, housing is falling to the same "free market" bullshit that got us into the mess that we are still in, and the true unemployment number, one that counts everyone not working and working in some low laying, no benefit job is well into the high twenties, low thirties. No society can continue with these numbers and the US and Europe will be no different. Europe is in the midst of it's Great Shadow Depression, a word not used anywhere ever though by the very definition of the word, they are in one. Our economy yo-yo's between severe recession to mild depression, neither of which is showing any sign of abating.
Historical patterns say the economy is headed for a major downturn. I say this as one who writes A LOT about the sale of precious metals for several large gold suppliers and watch the markets carefully as a result. Copper is one of those lesser known metals that few watch as it's not as flashy as gold or platinum. However, copper is a major market indicator, thus the nickname "Dr. Copper." This year, copper has fallen off a cliff, a real troubling sign, as have almost all precious metals for unbelievable reason.

The world is hoarding gold while selling paper certificates in mass bulk. Half of these paper derivatives don't even exist, with full knowledge by our government that it is going on. The reason I know this is that if I can figure what is going on, along with thousands of others, someone in the government would be smart enough to as well. The only explanation is that they are in on it, perhaps even getting some sort of kickback for looking the other way. The main reason they are looking the other way is that the banks have all the power right now and may be dictating rules to the government and not vice versa, a scary proposition. They could be saying " Do as I say or I will tank the economy" It would explain a lot of what is going on right now.
Housing is falling back down, as the whole price increase was bull anyway as flipping is all the rage again and the banks are sitting on millions of foreclosures right now, artificially keeping housing prices from slipping even further down. Home renovations have fallen, retail spending has followed, the Dry Baltic Index is falling further and further behind, and economic figures from places like Europe and China are terrible. So how in the hell are stock prices rising? They are obviously rigged with all the printed money, QE Infinity, that is doing the same to stock prices that banks are doing to housing. It's all bullshit and eventually, it will come crashing back to Earth. Here are 12 indicators from Blacklistednews.com:

#1 The price of copper has traditionally been one of the very best indicators of the future performance of the U.S. economy. The fact that it is down nearly 20 percent so far this year has many analysts extremely concerned...

"Copper is actingexactly as it did when I wrote about the impotence of liquidity in the face of the (then imminent) 2007 recession. Once again it is giving us an early warning that liquidity will not save risk assets: time to get out of equities," Edwards wrote in his latest research note, on Thursday.

#2 Home renovation spending has fallen back to depressingly-low 2010 levels.#3 As Zero Hedge recently pointed out, U.S. retail spending is repeating a pattern that we have not seen since the last recession...

Retail sales of clothing is growing at the slowest pace since 2010; but while major store sales are about to drop negative YoY for the first time in over 3 years, the utter collapse in general merchandise sales is worse that at the peak of the last recession at -5%. It seems tough to see how a nation with an economy built on 70% consumption is not in a recessionary environment. And while this alone is a dismal signal for the discretionary upside of the US economy/consumer; as Gluskin Sheff's David Rosenberg points out real personal income net of transfer receipts plunged at a stunning 5.8% annual rate in Q1. The other seven times we have seen such a collapse, the economy was either in recession of just coming out of one.

#4 Manufacturing activity all over the country is showing signs of slowing down. In fact, Chicago PMI has dipped below 50 (indicating contraction) for the first time since the last recession.#5 In April, consumer confidence unexpectedly fell to a nine-month low...

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment declined to 72.3 in April from 78.6 a month earlier. This month’s reading was lower than all 69 estimates in a Bloomberg survey that called for no change from the March number.

#6 NYSE margin debt peaked right before the recession that began in 2002, it peaked right before the financial crisis of 2008, and it is peaking again.#7 The S&P 500 usually mirrors the performance of Chinese stocks very closely. That is why it is so alarming that Chinese stocks peaked months ago. Will the S&P 500 soon follow?#8 The economic data coming out of the Chinese economy lately has been mostly terrible...

For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels in the Chinese service sector decreased for the first time since January 2009 (remember that year).China’s LEI also shows no sign of recovery. If anything, it indicates China is heading towards an economic slowdown on par with that of 2008. And if you account for the rampant debt fueling China’s economy you could easily argue that China is posting 0% GDP growth today.

#9 Things just continue to get even worse over in Europe. Unemployment in both Greece and Spain is now about 27 percent, and the unemployment rate in the eurozone as a whole has just set a brand new all-time record high.#10 Crude inventories have soared to a record high as demand for energy continues to decline. As I have written about previously, this is a clear sign that economic activity is slowing down.#11 Casino spending is usually a strong indicator of the overall health of the U.S. economy. That is why it is so noteworthy that casino spending is now back to levels that we have not seen since the last recession.#12 The impact of the sequester cuts is starting to kick in. According to the Congressional Budget Office, the sequester cuts will cost the U.S. economy about 750,000 jobs this year.
None of that is a good sign of things to come. Some day soon, we are going to wake up and watch as the Dow slides back down to where it was 2008 and, most likely, much lower. I am thinking 3000 range. We have done nothing to fix any of the major problems and the blame for that goes to both democrats, the GOP, the Tea Party and Obama. Nobody is coming up with any reasonable ideas on what we should be doing like giving the middle class more money while we grab 90% of the elites obscene wealth, especially if they have untold trillions stashed in offshore accounts. Unless we start doing just that, none of us are going to have anything as the greedy among us consume everything. I would like to remind them that that didn't work out too well in France in the 1870's. It will be far worse here.